Not every Shopify order is paid through Shopify Payments. Some customers pay with PayPal, some orders come in through Faire or Etsy, and some get marked as Manual by the store owner. Each of these payment methods is called a gateway, and each gateway holds your money for a while before sending it to your bank.
ConnectBooks keeps all of this organized with clearing accounts in QuickBooks. Think of a clearing account as a waiting room for your money: sales sit in it until the gateway deposits the funds into your bank. At any moment, its balance answers 1 simple question: how much money is this gateway still holding for me?
How it works
Setup: 2 steps, 1 time
Create a clearing account in QuickBooks for each gateway. 1 gateway, 1 clearing account. If you accept PayPal and also sell through Faire, create "PayPal Clearing" and "Faire Clearing". A Bank type account works best, since you will record transfers in and out of it.
Map each gateway in ConnectBooks. Go to Stores & Files, open the Shopify store, open the Accounting tab and click Settings next to Accounting Settings. Next to each gateway, pick its clearing account. This tells ConnectBooks where to post each gateway's sales.
What ConnectBooks does
Once a week, ConnectBooks posts all sales into the right clearing account for each gateway.
What you do
Record deposits as transfers. While reconciling your main checking account in QuickBooks Banking Transactions, record each gateway deposit as a transfer from that gateway's clearing account.
Enter fees at month end only if you did not set fee rates for that gateway under Gateways & Apps (Add fees). Most gateways charge processing fees. PayPal is the exception, since ConnectBooks imports PayPal fees for you.
Check for a 0 balance
Once the deposits are transferred and the fees are entered, each clearing account should sit at exactly 0. If a balance remains, that is usually fine. It is simply money the gateway is still holding at month end.
Example: ConnectBooks posts $2,300 of Faire sales into the Faire clearing account. Faire deposits $2,185 into your checking account, which you record as a transfer. At month end you enter Faire's $115 in fees. The account lands at 0. Everything is accounted for.
The common gateways
Manual
Orders that the store owner or an administrator processes in Shopify and marks as Manual. Common reasons: the owner took merchandise, an order was given away, or the customer paid with cash or a check. (A Cash and Check gateway can also be created in Shopify.) You clear these out yourself, based on what each order actually was. There are usually no fees to record.
PayPal
The easiest one. PayPal is the only gateway where ConnectBooks imports the processing fees along with the sales. We recommend setting PayPal up as a real bank account in QuickBooks Online and reconciling it monthly, just like a checking account.
Faire, Etsy and other channel apps
When the Faire channel or a similar app is connected to Shopify, ConnectBooks imports those sales into their own clearing accounts. Add the fees yourself at month end, unless you set fee rates for that gateway under Gateways & Apps. When Faire deposits money into your checking account, recording that deposit as a transfer pulls the money out of the Faire clearing account and clears it.
Shopify Checking (Shopify Balance)
Some stores use a Shopify Balance account. Think of it as another checking account, with Shopify as the banker. Create a Shopify Checking account in QuickBooks. Then, in the same Accounting Settings, pick the Shopify Checking account in the Bank Account field for Shopify Payments. Clear it out whenever you move money from Shopify Balance into your regular checking. Fees for Shopify paid orders are recorded properly. Treat it like any real checking account: reconcile it monthly, and you can link it in QuickBooks Online Banking Transactions so its activity imports automatically.
In short: ConnectBooks puts every sale into the right waiting room, and you move the money out as it reaches your bank. When the waiting rooms hit 0, your books are clean.
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Frequently asked questions
What is a clearing account?
A waiting room for your money in QuickBooks. Sales sit in it until the gateway deposits the funds into your bank.
Where do I pick the clearing account for each gateway?
Go to Stores & Files, open the Shopify store, open the Accounting tab and click Settings next to Accounting Settings. Next to each gateway, pick its clearing account.
Do I need to enter fees every month?
Only if you did not set fee rates for that gateway under Gateways & Apps (Add fees). PayPal fees are imported for you.
My clearing account isn't at 0 at month end. Is that a problem?
Usually not. It is money the gateway is still holding.